Market top? Not with these tech earnings

So this is how earnings season going to go? In the early stages, the results, at least in terms of what they mean to investors, have been aces. Just look at Google this morning. If this is how the tech sector is going to play out in the coming weeks, it’ll be hard to stop this market.

It’s not just Google. Six of the nine biggest companies that reported midweek traded an average of 5.4% higher, post-report. Thanks, Netflix
NFLX, +0.89%
(see “the chart”). The three with losses, including Goldman Sachs
GS, -0.56%
were all down less than 1%, BTIG reported.

Clearly, traders are looking for reasons to buy, and, to this point, pretty much shrugging off the reasons to sell. This is an environment we’ve grown accustomed to during this prolonged rally.

No doubt the folks who have spent much of the year preaching fire and brimstone about this market’s frothiness have to be ready for padded cells after the recent action. Over the past week alone, Google
GOOG, +0.81%
Amazon
AMZN, +0.99%
Netflix
NFLX, +0.89%
Facebook
FB, +1.08%
and EBay
EBAY, -0.62%
have combined to add $133 billion in market cap, according to Michael O’Rourke of Jones Trading. Chalk most of that up to what we’re seeing from the huge premarket pop in Google shares.

“The trading action in the U.S. equity market in the past 24 hours is the type that prompts flashbacks to the equity-bubble blow-off in early 2000,” O’Rourke said. China, in its current state, is also reminiscent of the dot-com blueprint (see “the call”). More on those tech bubble fears here.

Key market gauges

Stocks may be in for a bit of a breather, with futures on the Dow
US:YMU5
and the S&P
US:ESU5
pointing to a slightly lower open for U.S. markets. Asia
ADOW, -0.73%
had a good day overall, led by a strong push from the Shanghai Composite
SHCOMP, +2.15%
Europe
SXXP, +0.16%
is struggling for direction in the early half of its session. Crude
CLU5, +0.00%
and gold
US:GCU5
are hardly budging.

The quote

“Given the chance, Gawker will always report on married C-suite executives of major media companies f***ing around on their wives.” — Gawker editor Max Read, in a tweeted response to some heavy backlash that followed this scurrilous “report”.

The economy

It may be Friday, but there are still some data nuggets to parse through this morning. Consumer inflation data showed rising prices again, albeit slowly. At 10:00 a.m. Eastern, the University of Michigan’s consumer-sentiment index will be released.

A couple of others to keep an eye on this morning are General Electric
GE, -1.70%
and Honeywell International
HON, -0.19%
which both lifted their outlook after better-than-expected performances. Other than that, you’ll just have to wait until next week for the next batch of key earnings. Check out MarketWatch’s Earnings Wall.

The buzz

This isn’t the first time Elon Musk has popped up in the buzz section. And it won’t be the last. Next stop on the relentless Tesla
TSLA, -0.44%
media tour is an event slated for 2 p.m. Eastern this afternoon. The production version of the Model X? More on the gigafactory?

The chart

Do analyst price targets mean anything? Anything at all? (Rhetorical.) In the case of Netflix, it’s almost laughable how Wall Street researchers have had to chase the stock. As it stands now, the stock is already above its 12-month consensus forecast of $110.81, as you can see by this chart from the Financial Times. In fact, over the past two years, the stock has traded above the target about 60% of the time. Still, it’s not getting a ton of love. Only half of the analysts rate Netflix a buy.

The call

Jani Ziedins of the Cracked Market blog spared us the chart overlay, but that didn’t stop him from entertaining the idea that the bubble pop in China could potentially echo what we saw during the dot-com implosion. “China’s selloff has a long way to go to match the Nasdaq’s 80% plunge,” he said. “Clearly we should be panicked and sell everything, right?” he asked, right before he answered himself. See, if there’s a similar demise taking shape, a sizeable rebound could be in the offing. “Markets hate being predictable. When everyone claims the bubble is bursting, what is the market going to do? You guessed it, rally sharply.” If history repeats itself — hardly a safe bet — then China has, for now, found its near-term bottom. “Six months from now is when we need to reevaluate, he said. “But, in the meantime, enjoy China’s reprieve.”

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